Omdia: AI software revenue projected to reach $99 billion in 2025

Analyst firm revises its forecast downwards, amid uncertainty caused by Coronavirus

Chuck Martin, Editorial Director AI & IoT

July 7, 2020

2 Min Read

Analyst firm revises its forecast downwards, amid uncertainty caused by Coronavirus

As the world struggles with the impact of the COVID-19 pandemic, AI software revenue is estimated to reach $99 billion in 2025, according to the latest report by analyst firm Omdia – 22% below its previous forecast, issued in the fourth quarter of 2019.

Despite the decrease, the market still is on track to grow 35% annually until 2025.

What a difference a few months makes

North America is projected to drive much of the AI software revenue, representing 42% of the total, due primarily to large internal AI budgets.

Cumulative AI software revenue in North America is estimated to reach $155 billion between 2019 and 2025.

Revenue for AI software in Asia Pacific is expected to reach $28 billion by 2025, an increase from $5 billion in 2019, driven primarily by China’s rapidly growing market. Cumulative revenue for the period is expected to reach $104 billion, representing 28% of the world total.

When rated by cumulative revenue from 2019 to 2025, the leading industries for AI software are projected to be consumer, healthcare, retail, financial services, automotive, telecommunications, business services, and advertising.

The economic impact of the pandemic varies by industry, with early adopters pulling ahead of those who did not invest in artificial intelligence before the start of 2020.

“Industries that have pioneered AI deployments and have the largest AI investments are likely to continue to invest in what they view as proven, indispensable technology,” stated authors of the report.

Due to varying effects of COVID-19, industry rankings have changed since 2019, with healthcare leaping into second place.

Though AI represents a relatively small portion of overall software sales, the AI industry leaders reflect the overall trend of building a ‘data-industrial complex,’ with the associated massive investments in data centers and hardware infrastructure, according to Omdia.

When splitting the market horizontally – with the top five categories accounting for two-thirds of the cumulative AI revenue from 2019 through 2025 – the leaders are visual analytics, customer experience, and process optimization. The visual analytics category is being led by automated video surveillance.

In total, 27 use cases are expected to deliver annual revenue of more than $1 billion by 2025, with five of them topping $3 billion.

The leading use cases include voice and speech recognition, video surveillance, and customer service and marketing virtual digital assistants (VDAs).

The adoption of voice recognition is driven by the popularity of consumer-grade digital assistants in smart speakers and smartphones, and the growth of in-car voice assistants.

About the Author(s)

Chuck Martin

Editorial Director AI & IoT

Chuck Martin, a New York Times Business Bestselling author, futurist and columnist, is Editorial Director at Informa Tech, home of AI Business, IoT World Today and Enter Quantum. Martin has been a leader in emerging digital technologies for more than two decades. He is considered one of the foremost Internet of Things (IoT) experts in the world and his latest book is titled "Digital Transformation 3.0" (The New Business-to-Consumer Connections of The Internet of Things).  He hosts a worldwide podcast titled “The Voices of the Internet of Things with Chuck Martin,” where he converses with top executives from the companies driving the Internet of Things.

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